LNG Canada will once again use Chinese steel for the "specialized fabrication capability" it says it requires for its $33-billion Phase 2 expansion project in Kitimat, B.C.

When the proposed expansion led the list of early projects referred to the new federal Major Projects Office in September 2025, Prime Minister Mark Carney told reporters these ambitious building projects would be "at the heart of our new, comprehensive Buy Canadian policy." In fact, the joint venture will buy more components from the state-owned China Offshore Oil Engineering Co., Ltd. (COOEC), which also manufactured its first two liquified natural gas processing units, known as trains, now in operation.

LNG Canada to move forward with Phase 2 expansion project in Kitimat, B.C. LNG Canada gets go-ahead for massive expansion in B.C.

On Tuesday, LNG Canada announced an expansion of the facility’s production capacity, adding two more trains for a total of four on the site, increasing its production from 14 to 28 megatonnes per year once Phase 2 construction is complete, likely in the early 2030s.

At the event marking the final investment decision, CBC News asked the prime minister if the expansion would be built with Canadian or Chinese steel.

"It’s a great question for the proponents of Phase 2," Carney said. "I’ll leave it to them." "There will be full opportunities to buy Canadian steel, and we'll continue to invest in the Canadian steel industry to make sure that's the case. But it will be for them to decide," the prime minister said.

Accordingly, CBC News asked LNG Canada where it intends to source steel for its expansion.

"For the plant construction in Kitimat, the challenge is not a preference for offshore steel, but the specialized fabrication capability required for modules of this scale and complexity," LNG Canada spokesperson Paul Hagel wrote in an "There are no fabrication yards in Canada that can manufacture and deliver the additional modules required for Phase 2. Only five fabrication yards globally have the combination of space, capacity, quality systems and marine access required for this scope of work, including COOEC in China, which successfully fabricated modules for LNG Canada’s Phase 1."

Chinese state-owned producer holds 15% stake Shell Canada Energy is the majority operator and project leader in Kitimat, holding a 40 per cent stake in LNG Canada.

State-owned PetroChina, the largest oil and gas producer, supplier and global investor in China, is a 15 per cent shareholder. The other three partners in the joint venture are Malaysia’s Petronas (25 per cent), Japan’s Mitsubishi Corporation (15 per cent) and the Korea Gas Corporation, or KOGAS (five per cent).

LNG exported from Kitimat is distributed by these five energy giants to Asian markets, based on their relative stake in the project.

Prior to a final investment decision for Phase 1 of the Kitimat facility in 2018, the joint venture sought and received an exemption from steep anti-dumping and countervailing duties that had been levied on fabricated industrial steel from China to protect Canada’s steel industry.

Canada is among many countries that implement safeguards based on threats identified by its domestic steel producers. State-subsidized Chinese steelmakers produce more than China’s domestic economy requires. The surplus ships overseas, undermining the cost-competitiveness of steel manufactured in countries like Canada that have higher-paid, unionized workers and higher environmental standards.

The value of the concession the federal government made to LNG Canada for Phase 1 was estimated at $1 billion.

Minister concerned over B.C. Ferries' construction deal with Chinese shipyard Canadian shipyard slams B.C. Ferries' contract with Chinese shipbuilder The 2019 remission order published in the Canada Gazette said that LNG Canada, as well as the Singapore investors behind the Woodfibre LNG project in Squamish (slated to come online in 2027), had told the finance department there was no Canadian capacity to produce what they needed. They also framed the cost impact of these duties as having a "negative impact on investment decisions." In other words: without it, the deal may not have gone ahead.

However, the duties in effect when the use of Chinese steel first drew negative attention in 2018 expired after five years and have not been renewed.

LNG Canada told CBC News there are no tariffs now on importing steel components from its Chinese supplier.

The office of Finance Minister François-Philippe Champagne told CBC News that the Canada Border Services Agency determines whether additional levies are required on Chinese steel to avoid predatory dumping. In this case, the measures were dropped and Canadian producers have not objected, because these particular components don’t directly compete with what they make.

In 2024, other surtaxes and tariff rate quotas (volume restrictions) were placed on a list of specific Chinese steel products that could threaten the viability of Canada’s domestic industry. That list, however, does not include what LNG Canada is importing. Compressor stations target 70% Canadian steel Other aspects of the Kitimat expansion may, however, use Canadian steel. For example, in order to expand storage and production at the export terminal, Coastal GasLink needs to expand the volume of gas moving in its pipeline network to Kitimat.

The new compression stations required along the pipeline will be "targeting almost 15,000 tonnes of steel from Canadian suppliers or mills, representing approximately 70 per cent of the steel required for that work," the LNG Canada spokesperson wrote.

That apparent prioritization of Canadian supply chains would be more consistent with the assurances the prime minister gave in September 2025, when LNG Canada’s Phase 2 expansion led the first list of priority referrals to the new federal Major Projects Office.

"These major projects will be at the heart of our new, comprehensive Buy Canadian policy," Carney said in his remarks a year ago. "To strengthen Canada’s independence, resilience and security, we will build with Canadian steel, lumber, aluminum, and by Canadian engineers and tradespeople. We will be our own best customer." Unlike public purchasing contracts now subject to the federal government’s Buy Canadian procurement guidelines, the supply chains used by private sector energy companies are, as Carney noted Tuesday, up to them to decide.